Mississippi, Utah Add $660M to FFELP SLABS Pipeline

Two more student loan securitizations totaling over $660 million joined the new issue pipeline this week.

The Mississippi Higher Education Assistance Corp. (MHEAC) is readying a $387 million student loan securitization, according to a presale report published by Standard & Poor’s.

The MHEAC Series 2014-1 transaction will be backed by student loans that are at least 97% reinsured by the U.S. federal government. Most of the note proceeds will be used to refund the outstanding auction-rate securities issued under the corporation’s 1999 and 2004 indentures.

The loan pool consists of approximately 76% consolidation loans, 24% Stafford loans, and 1% Parent Loans for Undergraduate Students (PLUS) loans and Graduate PLUS loans. The series 2014-1 notes will receive payments primarily from collections on a pool of FELLP loans.

The pool of loans is well seasoned, with 78% of the loans in active repayment status, with 67% in repayment for more than three years.

S&P has assigned preliminary AA+’ ratings to the $387 million 2014 class A-1 senior, floating-rate notes maturing in October 2035.

A subordinate $10 million class B-1 tranche was not rated by S&P.

Bank of America Merrill Lynch will underwrite the deal.

Founded in 1980, Mississippi Higher Education Assistance Corporation is a nonprofit corporation organized to acquire student loans incurred under the Higher Education Act.

The State Board of Regents of Utah is also in the market with $277 million FFELP securitization, according to Fitch Ratings.

Fitch has assigned a preliminary AAA’ rating to the Series 2014-1 notes, which have a final maturity of December 2038 and benefit from credit enhancement of 5.68%.

The presale report notes that less than 2% of the loans are rehabilitated.

The State Board of Regents will provide day-to-day servicing of the loans; the backup servicer is the Pennsylvania Higher Education Assistance Agency.

The two not-for-profit lenders join Navient, which is also in the market this week with its first private student loan securitization since being spun off from Sallie Mae in April.

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